People are pessimistic about Medicare’s longevity. Roughly 7 in 10 adults under 65 say they’re “worried” or “extremely worried” the program won’t be around when they need it, according to a new Gallup poll.
That may come as no surprise. Medicare expenditures exceeded $1 trillion in 2023. They’re on track to grow by roughly $930 billion over the next decade. The program’s Part A hospital insurance trust fund will run out of money in 2036, based on current trends.
Preserving Medicare for future generations will require reining in the program’s future spending commitments.
Lawmakers can start by raising Medicare’s eligibility age. In 1965, when President Lyndon B. Johnson created the entitlement, the typical 65-year-old man and woman could expect to live another 12.9 and 16.3 years, respectively.
Fast-forward to 2022 and life expectancy at 65 had soared to 17.5 years for men and 20.2 for women — an incredible gift of modern medicine.
Seniors are increasingly healthier and hardier. It’s not unreasonable to delay when people qualify for Medicare to reflect that fact.
Lawmakers can also increase means-testing to ensure that scarce taxpayer resources are not going to pay for the care of wealthy people who can afford it on their own.
At present, Medicare charges higher-income seniors more in premiums for their Part B outpatient and clinician services and Part D prescription drug services. But such means-testing doesn’t kick in for a single person until his income exceeds $103,000 — almost double the average U.S. salary. Married couples don’t face higher premiums until their incomes are beyond $206,000.
Barely 8% of Part B enrollees and 8% of Part D enrollees pay higher means-tested premiums, according to a May 2024 paper published by the Paragon Health Institute.
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That paper floats several ideas for ratcheting up means-testing. Congress could lower the income threshold so fewer high-income earners qualify for large subsidies or even eliminate subsidies for the top income tier. Lawmakers could also adjust means-testing to include measures of wealth other than income, such as lifetime earnings. Finally, Congress could introduce means-testing in Medicare Part A for the first time.
An average person with average earnings who turned 65 in 2020 will receive $176,500 more from Medicare than what he has contributed through taxes and premiums, according to Paragon’s research. Lawmakers will need to get a hold on the entitlement’s spending if it is to survive for the long term.
Sally C. Pipes is the president, CEO, and Thomas W. Smith fellow in healthcare policy at the Pacific Research Institute. Her latest book is False Premise, False Promise: The Disastrous Reality of Medicare for All (Encounter 2020). Follow her on X, formerly Twitter, @sallypipes.
